Dana Jiron, CMO

The scarcity of electronic components has taken a toll on component manufacturers, distributors, original equipment manufacturers (OEMs) and contract manufacturers (CMs). 2018 was a challenging year with spot shortages that continued to plague customers. As the second quarter of 2019 ramps up, the demand for high capacitance base metal electrode multi-layered ceramic chip capacitors (MLCCs), resistors, semiconductors and graphics cards continues to grow adding extensive lead times on quotes to electronic manufacturers.

This shortage of supply depends upon numerous impending issues, the most prominent of which is the advancement in technology. The 21st century is facing a surge of innovation with prominent industries such as; automotive, defense, mobile, industrial and internet of things (IoT) require more electronic components to meet the market demand. Electronic manufacturers have increased the number of electronic components used inside products which impacts supply and contributes to the scarcity of parts. With the introduction of new inventions every day, existent components are becoming obsolete. This makes it difficult for suppliers to fill demand resulting in some leads times extending to over 12 months. This obsolescence issue virtually impacts all segments of the electronics industry.

Contract manufacturers are estimating that the long lead times and shortages for multi-layered ceramic capacitors (MLCC’s) may extend to four years. This is a sore topic in the industry for with pricing increasing by 60 percent in the last 6 months. Additionally, Infineon has issued an EOL notice for small signal products with an LTB of December 31, 2019. Xilinx and Rohm are also indicating extended lead times, which makes it essential to share long term forecast information with supply chain partners to maintain continuity of supply. Another example of the exponential use of MLCC’s is the iPhone. Newer smart phones models are using far more components on the board with quantities of MLCC’s increasing from 500 to 1000.

Government policies, tariffs and trade agreements are also impacting component pricing and shortages. Tariffs rates in the US on the import of components with the Country of Origin from China, continues to impact the supply chain. This not only adds cost to the product, it continues to create an imbalance of supply versus demand for millions of electronic components

This puts pressure on the planning department to manage resources to minimize loss and get products out the door to customers. Scarce parts can be an opportunity for scammers to introduce counterfeit components in the market requiring buyers and suppliers to have proper controls in place to avoid bad parts. Inland Empire Components inspects, tests and conducts multi-stage inspections using procedures based on AS6081 standards to ensure only the highest quality components are shipped to the customers for counterfeit avoidance.

Distributors and OEMs also report that price increases on legacy parts have increased exponentially over the last few months. In an effort to move customers over to newer technologies, less profitable components continue to be discontinued with suppliers encouraging buyers to move over to new technology. It’s often a challenge to evaluate the cost saving of purchasing legacy parts against the price of a circuit board redesign.

All of these challenges call for a strong sourcing strategy. Extensive lead times require buyers and engineer to find alternative solutions. This may include a complete redesign of a circuit board, last time buys, and sourcing from trusted independent distributors.

About Inland Empire Components, Inc.

Established in 1989, Inland Empire Components, Inc. is a WBENC Certified Platinum supplier and leading stocking distributor with millions of legacy, spare and new electronic components in stock located in their Lake Elsinore warehouse, with billions more available through an exclusive network of quality suppliers. Inland Empire Components, Inc. provides the most difficult to locate board level components to buyes and engineers withing the electronic manufacturing community. The company services OEMs, EMS and distributors globally in the technology sector including aerospace, military, communications, medical, consumer and industrial industries. The company also provides sourcing and procurement and excess inventory solutions to small, medium and Fortune 1000 corporations from their ISO9001:2015 and AS9120B certified facility.

Like this:

It’s been several years since the last major component shortage
and now electronic manufacturers are feeling the pinch. Demand is outweighing supplies and in some cases, customers have reported lead times of 24 months or longer. As distributors and component manufacturers issue Product Change (PCNs), End-of-Life (EOL) and Life Time Buy (LTB) announcements, buyer and engineers are scrambling to meet quarterly goals and production demands. With hundreds of thousands of electronic components, semiconductors and finished good products going obsolete every year, the 2018 component shortage is adding to the challenges facing the electronic part supply chain.

Another situation causing pressure on the supply chain is the fact that silicon wafer foundries have announced a planned 20% price increase for 2018 and possible shortages out to 2021. This is compounding the sourcing problem for electronic buyers.

Manufacturers GlobalWafers and SUMCO, who produce the majority of the worlds silicon wafers used to make electronic components including CPU’s and DRAM inside computers, site a shortage of 12-inch, 300mm wafers for the price increases.

A number of factors are causing the 2018 electronic component chip shortage including new industries such as the Internet of Things (IoT) and cryptocurrency mining which is causing the shortage of graphics processing units (GPUs) and spotty availability of raw materials.

It is always recommended that electronic product design and engineering teams review bill of material (BOM) parts so they can be purchased from multiple manufacturers to avoid an interruption in the supply chain.

Like this:

The EPSNews Electronics Purchasing And The Supply Chain is reporting that obsolescence, mergers and acquisitions and an unexpected increase in demand for electronic components is causing component shortages up and down the supply chain.

As the supply of electronic components swings from too much inventory to extended lead times and ever increasing part obsolescence, distributors are reporting long lead times increasing across multiple products categories including: memory, discretes, IGBT, logic, optos, LEDs, MCUs, and mosfets.

“Demand is starting to outpace supply which is causing pressure on pricing and extending lead times” says, Dana Jiron, President and CEO of Inland Empire Components, Inc. “We’re advising our customers to consider last time buys now to avoid the high cost of circuit board redesigns”.

It is recommended that buyers and engineers have a conversation with their suppliers regarding capacity, lead times and product End-of-Life (EOL) and Product Change Notices (PCN) to determine the best actions to take to avoid emergency shortages.

Like this:

Let me be blunt. If you are the one assigned to find components at your facility, your job may be challenging to say the least. Everyday we talk to buyers and engineers who are frustrated with having to find components.

Here is a great real life example of what I’m talking about. First, I will leave the name of the customer anonymous for obvious reasons. Several months ago, one of our OEM customers approached us about their need to buy an obsolete part. The part is a popular programmable logic device that went end-of-life. Our customer made a business decision and decided not to purchase the parts which were announced obsolete.

The result was that our customer ended up needing a significant quantity of the parts. First they went to their original supplier who said some version of “sorry…no more parts”. Next, they came to us for help. They called us to find components for them. Flash forward 5 months later…our customer did not purchase the parts quickly when they were quoted and our vendor sold them elsewhere.

Independent Distributors operate from a different business model then say…Avnet, Arrow (which got into the business when they bought Converge), Digikey, Newark and Future Electronics. Our business model requires us to find components in a fast moving marketplace devoid of scheduled orders and 20 week lead times.

Although we advice our customers to place their orders immediately and not wait, often they have to get multiple signatures just to get the parts purchase. where the franchised and authorized distributors offer new parts directly from the manufacturer.

We continue to source parts for the customer and as we sift and sort the good parts from the questionable, our customers frustration mounts. They operate under the constraints of a bureaucracy that it slow and cautious. We operate from a volatile marketplace sometimes akin to the stock market. It’s the wild west when you have to find components that are either obsolete or back ordered for 40 week.

Recently a customer asked us to source a very difficult part. We subscribe to multiple online electronic component trading platforms. The annual investment to belong to these services is significant. We have multiple OEM customers who act as vendors when they wish to sell off some of their inventory. We re-market these electronic components when we are confident that the product meets the customers expected standards.